Gridlock doesn’t cause policy stability---it reduces consensus areas among parties which causes regulatory ping-pong when power transitions occur.

While these short-lived pain points can be estimated, the long-term consequences of such extreme political grandstanding may have the bigger impact. As American politics becomes more polarized, it gets harder for our government to pass necessary bi-partisan legislation that deals with real issues facing the economy.

Instead, the business community is increasingly stuck having to navigate uncertain policy environments. One political party takes power and shoves through their pet priorities, until the other side takes power and rolls those policies back.

This so-called “regulatory ping pong” destabilizes our business environment, clouds the long-term visibility for CEOs, and reduces business investment and consumer confidence. Quite possibly, the sluggish growth of the post-Global Financial Crisis period could be at least in part attributed to disappointing business investment and the difficulty in making capital expenditure outlays in such an uncertain regulatory regime.

Policy instability raises the bar. It requires capital allocators to consider the rules of today, and whatever those rules could possibly be tomorrow. For the US economy to reach its full potential, finding compromise amid differing viewpoints is critical to maintain a healthy business environment that encourages economic growth.